Friday, February 25, 2011

Urgent: In second wave of 2010 executive bonuses, board hands out 1M-plus shares of Gannett options

Gannett just disclosed that the board of directors gave more than one million options on the company's stock to a dozen senior executives this week -- a trove potentially worth millions of dollars, at a time when the company has been slashing thousands of jobs and reducing wages through mandatory furloughs.

The options are part of the executives' annual pay last year. They give executives the right to buy shares at a pre-set price over several years, no matter how much more the stock is worth on the open market. For many companies, options are a significant part of annual pay.

Corporate disclosed details of these options in a series of documents filed late this afternoon with the U.S. Securities and Exchange Commission. The documents show that most of the executives received fewer options than they did a year ago. The options' ultimate value will depend on the direction of GCI's stock, however.

The options carry a so-called strike price of $16.23 a share. They vest, or become the executive's property, in four equal annual installments starting Feb. 23, 2012.

For example, CEO Craig Dubow got 235,000 options. A year from now, if GCI stock is trading for, say, $20 a share, Dubow could claim 59,000 of those options at $16.23 each, then sell them immediately for $20. That would net him a profit of $222,430.

Of course, if GCI trades for less than $16.23, the options would be worthless. Shares closed today at $16.34.

Dubow got about half as many options as he did for 2009. COO Gracia Martore got 184,000, or 39% less.

Of the 12 executives, two are relative newcomers: Chief Financial Officer Paul Saleh and labor relations chief William Behan; both were appointed last year. Saleh, for one, got 125,000 options this week.

These are the second set of stock awards given to executives as part of their 2010 pay. In mid-December, the board gave Dubow and other top managers hundreds of thousands of shares of restricted stock, known as RSUs.

The executives' total pay for 2010, including any cash bonuses, will be disclosed next month, when Corporate files the annual shareholders' proxy report. (What five highest-paid executives got paid in 2009.)

Earlier: A year ago, option awards show big increases for Martore, but not Dubow


  1. I see the 2010 shares are down from 2009. It's good to see top management take their share of sacrifices.

    Considering our companies fiscal health, this should be criminal.

  2. Jim, hasn't Bill Behan been around Gannett for years?

  3. 10:45 Thank you. Yes on Behan. But he was promoted to his current job only last year. I've tweaked this post to make that clear.

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  5. How many millions have these guys made over the last 10 years. Probably $100,000,000 on these things. What a joke. They are all riding first class to vacations amd second and third homes and all I got is the pink slip. Jokers.

  6. The text of the post is a bit shorthand on how "options" work, and a little more background might be useful. The value of the options is not "millions" but "zero" until the stock goes up. The value to the executive is the difference between the strike price (16.23) and whatever price the shares can gain over the years. The "vesting" is just when you can exercise the options. The total value of the shares doesn't vest -- that happens with restricted shares, which is another element of the typical bonus. Shareholders tend to like options as a bonus mechanism because they align the executives' incentives with those of the shareholders -- that is, the executives only benefit when the stock goes up.

  7. I have no problem with options being given. I have a huge problem with the short time frame in which they vest. Again, the Board shows its lack of wisdom. A one-year option only means the officers have no incentive other than to continue to slash and burn to float the stock. There is no incentive to build a new business line or otherwise lay a foundation for a new future. A company operated on a quarter-to-quarter basis will continue to be operated that way.

  8. Anonymoun said... westcheter site promote tony simmons as new president and publisher we all will be outsource.

  9. I will never feel guilty about getting overtime again.

  10. 10 am - You should be so lucky as to get overtime. Our site kept a tight rein on overtime, and reports went out regularly to the managers when overtime was reported.
    Nevertheless, what you shouldn't feel guilty about is arriving at 8 am and leaving at 5 pm.
    I was salary, with no option for overtime and it took me a very long time to realize that it was all I was ever going to be paid for. Respect for a high work ethic doesn't translate into higher pay or promotions.

  11. And now my day is just ruined.

  12. 8:21 AM is right on and the thing is if the strike price is $16.23 and a portion can be 1st exercised February of 2012. Quite frankly the odds of the stock being at 16.23 is rather high and will more than likely be much lower than that (essentially making the options worthless). Gannett is ONLY driving income through cost cutting and not by growing revenue. This cannot continue indefintely (i.e you can only cut back to a certain number of employees and still maintain operations). So Gannett's hourglass is definitely running low on this game they are playing. Cutting people is great, but if it is your only plan to increase your bottom line indefinitely, it is a business model that will ultimately fail.

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  15. When you have executives who have the power to fire employees in order to artificially increase profits and meet target metrics and collect bonuses and stock options, you have a soulless, cannibalistic enterprise unworthy of investors, workers and customers.

  16. 9:59 p.m. - You've just described modern corporate America.

    The status quo needs to change.

    Personally, I think companies that do this (thereby burdening our government with hundreds of newly unemployed people) are committing TREASON!


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